Re: Vote on Values, But Bet on Beliefs

From: Robin Hanson (
Date: Tue Oct 03 2000 - 11:44:47 MDT

Peter McCluskey wrote:
> >Stock markets implicitly forecast out to infinity. That is, they estimate
> >a weighted average of future profits, weighted by risk-rated interest rates.
>On most of the questions that investors consider important, few people
>attempt to forecast more than 5 years ahead, ...
>The are many questions on which markets provide clear and relatively reliable
>longer term forecasts, such as whether Cisco's revenues will grow faster than
>U.S. Steel's revenues between 2005 and 2010. ...

I think we agree.

> >But I think this is as it should be. The benefits of citizens being
> >ridiculously rich just a year sooner are so enormous that it should
> >get a very large weight. Of course it wouldn't be worth, say, losing
> >half the population to a sudden death, but my proposed measure gets
> >that right too I think.
>I wish I could share your confidence that your measure properly weights
>the consequences of disaster. I suspect it will take a lot of trial and
>error before any measure deserves confidence.

All I really need to argue is that the initial measure I proposed is
not substantially worse than the implicit measure used by our existing
democracy. But I welcome proposals for improved welfare measures.
We can begin the trial and error you refer to now, if we have the time,
by constructing hypothetical decisions and comparing our intuitions about
the right decision with the choices preferred by various welfare measures.

For example, I proposed summing log(GDP) per each demographic group, but this
leaves open the question of what the zero point is for being dead. That is,
log(0) = negative infinity, so if dead people were taken as having zero GDP,
that would put an infinite weight on avoiding death, which is clearly too
high. I think people tend to put a value of about twice their annual income
on living another year. I'm not sure how to express this in the log

>Peter McCluskey | Fed up with democracy's problems? Examine Futarchy:
> | or .ps

Thanks for the plug. Btw, there an executive summary version at

Robin Hanson
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323

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